The Challenges of Improving the Economic Analysis of Pending Regulations: The Experience of OMB Circular A-4

Art Fraas () and Randall Lutter ()

Annual Review of Resource Economics, 2011, vol. 3, issue 1, 71-85

Abstract: Federal regulatory policy and the evaluation of regulations using benefit-cost analysis continue to be quite contentious. Advocates for more regulation claim that benefit-cost analysis loses information and impedes our understanding of the real beneficial consequences of regulatory action. Against this backdrop, economists and advocates of economic analysis have sought to improve the quality and technical content of benefit-cost analysis. This article examines key changes made by the 2003 guidelines in Circular A-4 for regulatory analysis issued by the U.S. Office of Management and Budget in an effort to strengthen such analysis. We discuss the motivation and basis for these changes—the treatment of discount rates and uncertainty and the cost-effectiveness analysis for rules affecting health and safety—and evaluate the U.S. Environmental Protection Agency's response to the A-4 changes in its analysis of environmental rules.

Keywords: benefit-cost analysis; cost-effectiveness analysis; discount rates; environmental rules; uncertainty analysis (search for similar items in EconPapers)
JEL-codes: K20 K23 K32 Q51 Q52 Q58 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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